Fallout blamed on tussle over huge cloud contract win

Exclusive In the past two hours, Red Hat has booted cloud upstart Piston out of the upcoming Red Hat Summit, changed its mind minutes after The Register started asking questions – and has now waived Piston's $13,000 summit sponsorship bill.

Documents seen by The Register indicate this kicked off after Red Hat lost out on a valuable business deal to Piston.

Both companies are involved in the development of OpenStack cloud software, and are jostling for customers in a competitive but strategically valuable market. Red Hat is trying to expand into the cloud world by touting on-premises OpenStack systems and its OpenShift cloud service, while Piston has spent the past few years honing its own custom OpenStack distribution.

Now, the camaraderie between the two open-source companies has shifted into outright aggression, with Red Hat sending an email to Piston on Friday at 7.55am PST canceling the startup's sponsorship of the upcoming Red Hat summit.

"Upon reviewing the 2014 Red Hat Summit sponsor list, Red Hat leadership has requested the termination of the sponsorship agreement with Piston Cloud," the email read. "Per the terms of the sponsorship agreement, Red Hat may terminate the agreement at its sole discretion. Please consider this e-mail your formal notice."

Piston had paid the Hat $13,000 for sponsorship – this will now be refunded. And in a screeching U-turn today, Red Hat confirmed to El Reg at 9.35am PST that Piston will be allowed to attend after all as a sponsor:

We made a mistake, and this decision was not properly vetted within Red Hat. We apologize to the vendor, and look forward to welcoming them to Red Hat Summit as our guest.

Brian Stevens, CTO of Red Hat, then tweeted to confirm Piston will be a sponsor of the conference; the startup confirmed it would be "delighted" to attend.

@jmckenty josh hope you and @Piston will still join us at summit as our sponsor. gratis. we messed up. thanks for calling us on it.

Red Hat gave no reason why the sponsorship was initially rescinded, but documents seen by The Register and relayed to us by a well-placed source indicate that Red Hat lost out to Piston for a valuable contract.

How valuable? We understand the deal to be a multi-million dollar strategically important contract with a major US Fortune 100 company.

"It's a clear show of fear. They aren't winning any customer deals against us now, and I don't think that makes them very happy," said Piston CTO Joshua McKenty in an emailed statement to The Reg moments before Red Hat did a 180.

"It's ironic because we've sponsored VMworld in the past, and we've won awards there and we compete with them. And VMware isn't even an open company and Red Hat is suppose to be."

Because of the sophistication of the respective companies' OpenStack technologies, any contract would almost certainly guarantee a long-term recurrent revenue stream, and might possibly become a public case study to help drum up further business.

In January, Red Hat reorganized its corporate structure to create a dedicated cloud division – a clear sign of just how important the Linux-powered company considers OpenStack-based tech to be to its future revenue.